Commercial Real Estate Distress: Rich Enderlin on Multifamily Deals, AI, Blockchain & Wealth Transfer

Rich Enderlin (00:00)
Yeah, it’s interesting. distress. Okay. Everybody wants distressed opportunities, value add play. but the distress market has changed very dramatically. Back in the old days, if you were under distress, you you weren’t able to pay the mortgage, boom, you’re in default. That’s public information. Everybody knows about it, and you know, the the the the sharks are gonna circle. Today it’s very different. Now, what I have come to find is that in these larger institutional type properties is what they’re instructing the owners or instructing their property and asset management folks is pay the mortgage.

Whatever money’s left over, go on ahead, put that into the property. Well, they’re not having enough money to fully fund the property operations. And so you’re seeing vacancies increase, you’re seeing NOIs drop. And that’s a different kind of distress, but that’s tremendous opportunity.

Scott Bursey (02:15)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey. And today, pros, we’re pulling back into the station with some serious high-octane fuel. We’re talking about a true titan of the industry, a man who has spent 40 years navigating the choppy waters of commercial real estate, with over $1 billion in personal transactions and a staggering $5 billion as a broker of record. Our guest brings a level of expertise that is rare in this business.

We’re going to tap into that legacy, discuss market shifts, and learn how he keeps his edge after four decades at the top. Let’s fire up the tanks. Please welcome Richard Enderlin.

Rich Enderlin (02:56)
Thank you, Scott. Pleasure to be here.

Scott Bursey (02:58)
It is just awesome having you here and Rich to help our listeners get up to speed. Please give us the front row seat on how your career ignited and where you’re pouring your fuel now.

Rich Enderlin (03:07)
Well, you know, over forty years. you know, fortunately I was able to start in the property management side of things and I transitioned into brokerage in the nineties, first starting with Marcus A Milla chap and then branching out on my own, and then became a broker owner for many, many years, and then eventually teamed up with the iconic Rand Sperry of Sperry Commercial for six years. And and then when COVID hit, I was done with the C-suite after 16 years, and I basically went back to my first love, which is brokerage.

and of course, as I mentioned to you, Scott, I I am a very happy and proud grandfather now of two grandchildren. So basically my concentration over now is just institutional size deals because of my experience and that’s all I work on. I’m a strictly a multifamily guy. That’s my asset class, that’s my specialty, and that’s my expertise.

Scott Bursey (03:51)
That’s awesome and congratulations.

Rich Enderlin (03:54)
Thank you.

Scott Bursey (03:54)
You know what really caught my attention about you was the way you’ve been able to maintain a massive trajectory for forty years. From your foundational days with Marcus and Millichap and your involvement in the historic Plaza Hotel acquisition with Donald Trump to leading major firms like BRC advisors and now building at EXP commercial. The consistency is unparalleled. That’s elite performance.

Rich Enderlin (04:21)
Well well, thank you for that. yeah, the the Donald Trump acquisition, I was twenty-three years old in in New York City and he bought the very famous Plaza Hotel. and up until twenty fifteen, that seemed to be a good thing to have on your resume. but you know, politics aside, it’s still a part of my history and and and I’m certainly not embarrassed by it. It was a tremendous opportunity. and it started did the trajectory of being in the business for 40 years. So that’s where it started. I was in the hospitality sector for many years, and then in property management and then

Transitioned into brokerage. What was interesting is when I started at Marcus, you I said, hey, I want to do hotels. This is in the 90s. And they said to me, Well, you know, Rich, if you want to eat, you probably want to do apartments. And so I I listened to that advice and I’ve been in the multifamily sector ever since. And then, you know, had a really good career. Marcus was only there for a couple of years and then branched out on my own and then eventually decided to become a broker owner.

at a time when it seemed like a good idea. And it was a difficult transition, but it was a fun building two companies. BRC Advisors, a mid-level firm in Los Angeles. we did about $2 billion a year in deal flow. So we weren’t small, but we certainly weren’t up with the big boys, but we were a mid-level size firm. and then again, the opportunity to merge with the great Rand Sperry and Sperry Commercial was a golden opportunity in the 20 teens and really an enjoyable experience working side by side with a truly iconic person in the industry. Certainly learned a lot from.

hand at a later stage in my career. and then of course, you know, COVID hit and my life changed. We all of our lives changed in COVID, but mine also because of being a becoming a grandparent and deciding at that point that I really wanted to just, I was done with the politics of the C-suite and just wanted to go back into my first love, which is still doing deals. And I’m too old, I mean I’m too young to play golf four days a week. So you know I still like to do deals. It still gets me fired up every day and I just love it. And I I love our business and I’ve been so blessed to be a part of it for 40 years.

Scott Bursey (06:57)
And your passion just resonates. Thank you for highlighting that, Rich. And curious, with forty plus years in the game, you’ve seen every cycle imaginable. What is the one core strength that has kept you relevant and profitable regardless of the economic climate?

Rich Enderlin (07:14)
You know, it it it’s the consistency of relationships. One thing that hasn’t changed, you you know, technology has exploded and and like I’ve never seen before, especially in the in the f last few years. But the one consistency of our industry is building those relationships. And I I spent an awful lot of time building those relationships, and they’re they obviously pay off when you have them for ten, twenty, and thirty years. there’s a lot of trust and and those those are are foundational.

so I i it it doesn’t really matter. Technology, you use technology to help you build the relationships, but it’s still people’s business. It’s still you gotta get in front of people and talk to them and and create a trust because it’s still human nature to do that. and then you having the experience and wherewithal and then using technology to access opportunities is is really where it’s at.

Scott Bursey (07:57)
Absolutely. Couldn’t agree anymore. People do business with folks that they know, they like, and they trust. Let’s shift gears here just a little bit, Rich. If you could walk us through, you know, we all have blind spots. When you look back at the early leadership roles at Speary or BRC, what is one hurdle you face that actually became a pivot point for your growth?

Rich Enderlin (08:23)
Well, it it’s it’s a very challenging business. You know, we still have almost a ninety-five percent attrition rate in our industry, and that’s tough. And so the joy of actually being able to first myself succeeding in it as a broker, but then as a broker owner, seeing the success of of my agents or my brokers was was just a big joy because the the time it we for every successful and superstar broker that I’ve had under my tutelage.

I there there were hundreds that just didn’t make it. So with the ones that do make it, you get great joy in. you develop a tight bond with them because they understand. And and that was the good thing about me being a broker myself, is that as a leader, they understood that I knew exactly what they were going through. And I was able to consult, I was able to give my expertise and things to help them out and tools. And you know, it it was just a a very productive relationship that I really thoroughly enjoyed. and did it for sixteen years in the C suite. So, you know, I

I it was at it for a long time but it was great to see and and nowadays, you know, with with technology and the fact that, you know, we you got you know, LinkedIn and all the the the the social media, I’m able to st still stay in touch with a lot of the folks that that I’ve overseen over the last thirty years and and that’s been a real joy.

Scott Bursey (09:31)
Is it just the passion that had you concentrate on multifamily now? Tell us what path led you back into multifamily.

Rich Enderlin (09:40)
Well, you so you know, as a leader, I was in charge of all asset classes and I but the experience level that I’ve had, I haven’t done just multifamily, I’ve done deals in every asset class. but that’s just my concentration. And it’s one of those things that when Marcus and Milichev, that was their philosophy, and it was a great foundation for me. And I still believe in that. And I understand that if you’re in a tertiary market somewhere in America, you know, you’re not in a big city, it might make sense to be more of a generalist in terms of of asset classes. But if you’re in a big city, you’re you’re in a primary market.

It’s really wise to concentrate because there’s just so many aspects that you’ve got to keep track of. And that’s why, you know, when I came back into brokerage, I came back to my first love, what I know, what I was able to build. And then of course, you know, I have have always had a database, and that database now is catered to what my institutional investors look for. And at this stage, Scott, what I do is, you know, I’m based here in Southern California. I have a lot of institutional investors, again, relationships over the years that are looking to deploy and reallocate their capital outside of California.

For a lot of good reasons. And so that’s been my concentration is locating opportunities and deals in like Texas and Florida for my California investors.

Scott Bursey (10:45)
Well thank you for highlighting that. And Rit, let’s let’s lay some rubber now, my friend. You know, right now the CRE landscape is shifting rapidly. Where are you currently seeing the low-hanging fruit that most investors are missing?

Rich Enderlin (11:34)
Yeah, it’s interesting. distress. Okay. Everybody wants distressed opportunities, value add play. but the distress market has changed very dramatically. Back in the old days, if you were under distress, you you weren’t able to pay the mortgage, boom, you’re in default. That’s public information. Everybody knows about it, and you know, the the the the sharks are gonna circle. Today it’s very different. Now, what I have come to find is that in these larger institutional type properties is what they’re instructing the owners or instructing their property and asset management folks is pay the mortgage.

Whatever money’s left over, go on ahead, put that into the property. Well, they’re not having enough money to fully fund the property operations. And so you’re seeing vacancies increase, you’re seeing NOIs drop. And that’s a different kind of distress, but that’s tremendous opportunity.

And that’s what I’d like to look for and highlight so that I can present that to my California investors. Whereas that acquisition cap rate might be a little lower than they would like. But hey, here’s why. You know, they’re at 80% occupancy when they should be at 95%.

And here’s why. And that’s the opportunity that we’re looking for. And that’s the different kind of distress that I’m seeing out there in the marketplace right now.

Scott Bursey (12:36)
Efficiency is key. The pros who are leaning into tech and new brokerage models like yours are are winning right now.

Rich Enderlin (12:44)
Yeah, you know, I I love technology. I think AI is incredible. I’m learning more and more about it. I’m pretty technologically challenged. But here here’s my concern for the younger generation is that you’re too much reliant on what AI can do and AI will underwrite and it you’re gonna miss opportunities if you’re not yourself vetting and analyzing these deals. If you’re just throwing it through an AI model and and they’re giving you they’re spitting out a cap rate and a cost rate and all that, that’s fine, but you will miss opportunities because every deal has a deal story.

And sometimes just the numbers alone don’t necessarily dictate that, or at the very least, there’s red flags in those numbers that AI is not yet at that ability to flag that for you. So the more experience you had in actual deal flow and understanding deals and understanding where the opportunities are, then though that that’s where you’ll be able to present and understand it better. So please don’t have that reliance on AI. Go through the process of vetting deals and underwriting them and asking questions and finding out where the opportunity is in each deal that you look.

Scott Bursey (13:41)
just moved the needle for a lot of our pros. Let’s shift gears now. You know, market volatility is the name of the game today. What is the biggest hidden threat you’re advising your clients to prepare for in let’s say the next 18 months?

Rich Enderlin (13:55)
Well, so interest rates have always dictated our industry. It it’s always been a frustration of mine personally because it’s so impactful and there’s nothing we can do about it. what I’m finding now is, you know, I just mentioned a little bit about the different kind distress that’s out there, but I think some of the biggest change that’s gonna take place in the next three to five years is blockchain. And for the very reasons that blockchain is gonna be is is basically not necessarily gonna replace traditional financing, but certainly it’s gonna shift it pretty dramatically.

And it’s not reliant on interest rates. It’s completely independent of interest rates. Not to mention the fact you can do deals in a far shorter period of time. On the institutional side, deals are taking you know four, five, six months to get done mostly because of lenders. Blockchain you can do that in in a week, two weeks. In fact, that probably the biggest delay is the paperwork with S-Crop. So I view blockchain as probably as transformational, if not more so, than even AI. I mean, when you combine the two of those.

Wow, are we gonna be in a very different place? I’m in a very different place than than where we have been since I started my career.

Scott Bursey (14:56)
Talk about efficiency. That’s about as efficient as one can get. Now if

Rich Enderlin (15:00)
Yeah. Yeah, it it’s it’s really

incredible. It’s it’s amazing how refined these technologies are and what they can do. I mean, you know, even you know, we’ll really quick, Scott, you know, back in the day, Marcus Vilchev, hundred aisles, right? 100 calls a day. That that that was the that was what you had to do. With AI technology, I can leave ten thousand voicemail messages and text messages in ten minutes. That’s insane to me. But it it’s so imperative, and at least if you’re p you’re not gonna be able to talk to everybody.

you’re getting your message out, whatever it may be, an off market opportunity, or maybe you have a ten thirty one exchange buyer that you’re trying to reach out to. I’m I’m blown away by this ability to be able to communicate with so many more people than I was able to back in the day.

Scott Bursey (16:24)
Thank you for expanding on that. And if you could look back, you know, ten years. Ten years down the road, what is the the single biggest transformation you think will define the next era of commercial real estate today?

Rich Enderlin (16:39)
Well, I think the biggest change is is I’m a baby boomer. I’m the youngest of the baby boomer, but I’m a baby boomer. My older baby boomers are turning eighty. So we are about to see the largest transition of wealth in the history of our country. I don’t think we’ll ever see it again. We are talking trillions. And so the second generation now is going to incorporate this, which means you you’ve got a whole new world and all kinds of opportunity there. All those relationships I’ve built over the years, many of those are going to be sipping my ties on the beach, right?

So I’ve got to build relationships with that younger generation, just like everybody else does, who’s maybe 10, 15, 20 years younger than I am. Yes, I may still have a little bit more on the experience level, but it’s still a relationship business. And there is a golden opportunity because think about it, even if only say 10% of the second generation wants to just dispose of the real estate, that’s still trillions of dollars. So there’s gonna be a ton of opportunity in the next 18 to say 36 or 48 months.

as these baby boomers get into their eighties and transition their wealth onto the next generation. Golden opportunity. So, you know, prepare for it because I’m excited about it. I’m s I’m glad I’m still young enough to to be able to participate. ⁓ but I really think it’s a great opportunity for those of you who who are a little bit newer in the business.

Scott Bursey (17:51)
You’re definitely talking long game strategy there. Thank you for that, Rich. And we need the high octane fuel from you now. You know, you’ve closed over one billion dollars in deals. If you were starting your career from scratch in today’s market, what is the one golden rule you would follow to ensure you reach that first one hundred million dollars faster than anyone else?

Rich Enderlin (18:14)
Well, let me preface by saying that, yes, I’ve done a billion dollars of deals, but just to give you all a reference point, the deals that I sold back in the day here in Southern California, apartment buildings were selling at forty, forty five thousand dollars a unit. Today those very same buildings are selling for 350 to 400,000 a unit. So you can get to a hundred million a lot faster than I did, no question. But I tell you the one thing that will not change, even with all the technology, is relationships. It’s all about building as many relationships as you can.

And if you do that, the more relationships you build, the more opportunities will present themselves. And then that’s how you’re going to get to your hundred million to then then off to your own six billion. And I’ve seen a lot of guys who who have no gray hair, you know, they’ve done a billion dollars, but of course again, the valuations are much higher. I will say that, you know, volume wise, we have really slowed in terms of actual transactional deals. Dollar wise, no, because again, the same thing, the the the the the value of real estate is much higher today.

But comparatively speaking, transactions, total transactions, we’re about the level where we’re at at the 08-09 recession. So it has been tough these last few years. You know, again, all the interest rate increases that we’ve had has really negatively impacted the ability to actually do deals. Hopefully that’s behind us now. Hopefully we’ll start to see rates drop and and we get some more deal flow like we did back in the day. But it’s still about relationships, Scott.

Scott Bursey (19:31)
Fundamentals, the relationship building, spot on. And that was some pure high octane fuel right there. Rich, you’ve given us so much good fuel here today, but is there any golden nuggets or any additional advice you can leave with our pros?

Rich Enderlin (19:48)
Yeah, I the way I’d look at it now, the approach, Scott, there’s there’s three boxes you gotta check off if you wanna be successful. Number one is going to be understanding the real estate experience. Number two is technology, number three is finance. And finance, when I say finance too, I obviously am as addressing blockchain as well. Those are the three boxes. So if you’re younger in the industry, you’ve got to get as much experience as you can. Have mentors, be involved with people who are who have got a lot of deal flow so that you can get actual deal experience, because there’s no substitute.

And then, of course, maintaining all of your technology and and sit and sustaining and keeping with it. AI is is like nothing we’ve ever seen before. Make the investment in AI so that it can help you to uncover opportunities. And then, of course, again, make sure you’re you’re an expert in finance, not just the the the traditional finance that we typically look at, but also again, this whole blockchain, because that’s where the world is going for commercial real estate.

Scott Bursey (20:41)
And that’s the trifecta right there. Rich, this has been an incredible masterclass. Before we let you go, if our listeners want to follow your journey or collaborate with you, what’s the best way for them to reach you?

Rich Enderlin (20:53)
you can my my I have a pretty simple email address. It’s [email protected]. richenderlin.com. It’s my website is richenderlin.com. So that’s the best way to get a hold of me. I’m happy to talk with folks. You know, at this stage of my career, Scott, I I I love talking to people and imparting whatever wisdom I can. I I want to help. That’s that’s what we do. That’s what was done for me when I started out, and and I want to pay back and do do that for for the younger generation. So feel free to reach out to me.

Scott Bursey (21:21)
Your wisdom was unparalleled today. Thank you so much for joining us, Rich.

Rich Enderlin (21:25)
Scott, thank you for having me. Really appreciate it and enjoyed it. Thank you.

Scott Bursey (21:28)
And to our listeners, we appreciate you. If you got value from today’s episode, please subscribe. We’ll be filling your tanks with an elite lineup of guests just like Rich who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.